Nairobi writer on Banking, Finance, Technology, and Investments

Category Archives: Britak

BritAmEA (i) Had an oversubscribed bond at the NSE that saw them raise Kshs 6 billion (ii) Completed the acquisition of 99% Real Insurance – giving them access to Mozambique, Malawi and Tanzania (the Competition Authority approved this deal with a caveat that they retain at least 85 of the 105 employees of Real) (iii) Established an office in Rwanda (IV) Britam will also pay about Kshs 2 billion for Equity’s 25% in Housing Finance.

Centum (i) Are proposing to acquire an additional 66% shares in K-Rep Bank (ii) Are seeking shareholder approval to create a Mauritius company, set up Kings Beverage, Bakki, Shefa subsidiaries, and also ratify the acquisition of 73% of Genesis & 30% of Broll (real estate) (iii) Ceded 42% of Two Rivers venture to investors at Kshs 6 billion, (iv) Are still in the running for Rea Vipingo offering Kshs 75 per share, over the Rea bid of Kshs 70 per share to other shareholders (v) Key Centum shareholder, Chris Kirubi said he wants to be a dollar billionaire.

Other recent deals include

Airlines

Kenya Airways to give Tanzania’s Precision Air a $10 million bailout.

Waiting to see who will officially be FastJet’s partner will be for their renewed push to enter the Kenyan aviation market.

KCB is now holding company, and is said to be interested in buying an insurance entity

(edit) Kenyan Women Holdings will sell 25% of the shareholding of Kenya Women’s Finance Trust to their 600,000 members between September and October 2014.

NIC Bank to have a corporate bond and rights issue during 2014

Atlas Mara to buy 77% of Development Bank of Rwanda

National Bank shareholders to vote on if money from their upcoming rights issue can go to pay off preference shareholders

Western Kenya politicians have support the creation of a new Mulembe Investment MFI bank, that will be part-funded by counties to serve 5 million people.

Building & Cement

Holcim is set to acquire effective control of Kenya’s Bamburi Cement as part of the planned merger between Holcim and Lafarge. “The parties do not wish to see any change to the status of Bamburi as one of Kenya’s leading industrial companies listed on the NSE.”

Food & Beverage

Danone bought 40%of Kenya’s dairy processing company Brookside which had revenue of Kshs15.4 billion (€130 million) i in 2013. It was previously 90% owned by the Kenyatta family with Abraaj owning 10%. Brookside collects milk from 140,000 farmers and has 3,000 employees.

Distell of Stellenbosch South Africa got privatization approval from the Kenya government to acquire of 26% of KWA Holdings E.A. that was previously owned by ICDC for Kshs 860 million (about $10 million)

CIC had dropped plans for a rights issue in favour of a corporate bond

Liberty Kenya proposed to pay a Kshs 1/= scrip dividend, but shareholders can opt for cash.

UAP had an oversubscribed bond that raised Kshs 3.1 billion against a target of 2B.

Africa Report magazine listed insurance companies as the top performers at the NSE in 2014 (see table).

Legal

Kenyan firms Hamilton Harrison & Matthews (HHM) and Oraro & Company have announced they are to merge pending regulatory approvals.

Media & Communications

#RIPCareyEaton

The $35 billion Publicis-Omnicom merger fell apart. The deal to combine the world’s largest advertising company was foiled by myriad difficulties, including who would run the new firm. The collapse of the deal is a win for WPP CEO Martin Sorrell, who campaigned aggressively against the merger of two of his biggest rivals.

A few months after his big deal with One Africa Media consolidating operations in Kenya, Uganda and South Africa, co-founder, Carey Eaton, was killed in Nairobi. See some tributes to Carey Eaton. The Economist also ranked the largest internet companies in Africa and One Africa Media topped this at $80 million, followed by Mobile Planet ($15 million) and Kopo Kopo ($10 million)

passed away – some tributes

Scangroup agreed to acquire a majority stake in a pan-African firm – the Experiential Marketing Group (EXP)

The Safaricom and Airtel buy out of (and split of) Yu appears to have stalled.

Oil & Mining

In the last year, Tullow Oil and Base Resources have paid the Kenya government $22 million and $16 million respectively .

Tullow received a judgment in its favour over capital gains tax payments that Tullow had made onHeritage’s behalf to the Uganda Revenue Authority. In August 2013, Tullow received $345.8 million from Heritage in satisfaction of this High Court judgment.

Swala Oil & Gas completed their Tanzania IPO which was oversubscribed and will now proceed to list on the Dar es Salaam Stock Exchange (“DSE”). The placement of 13.3 million shares with 1,869 new and existing shareholders also allowed Swala to keep excess funds from Dar IPO.

Transportation & Utilities

Transcentury sold their 34% in Rift Valley Railways to Citadel Capital for $43.7M recovering their cash, but below fair value..they cited the delayed turnaround of the railway consortium as reason for the sale

Actis confirmed sale of its stake in Umeme for $85.5 million to 20 institutional investors including Investec and Uganda’s NSSF

Kone Kenya acquired the business of Marryat & Scott, an elevator installation company.

Other Peoples Money

The Australian Navy seized heroin worth $296 million from a wooden boat off the Kenyan coast.

The Karen Blixen house was put up for sale for $9.5 million

Kenya’s NSSF had $600 million (Kshs 51 billion) in quoted securities as at June 2013 topped by Bamburi EABL and KCB.

The Competition Authority fined Tusker Mattresses (Tuskys) and Ukwala supermarkets Kshs 5.3 million while allowing them to continue pursuing a supermarket consolidation deal.

Funds raised will be utilized in private equity, ICT development and local and regional expansion projects.

The minimum investment is Kshs 100,000 (~$1,150)with multiples after of Kshs 50,000.

The 5 year bond (maturing in July 2019) pays 13% a year (6.5% every six months). So if you invest Kshs 100,000, you will get an interestpayment of ($) Kshs. 6,500 twice a year.

The bonds will be listed at the NSE for easy trading.

At the end of 2013 BritAm h

ad Kshs 47 billion of assets, revenue of Kshs 15 billion and pre tax profit of Kshs 3.1b. They had Kshs 3.7 billion in investment property and Kshs 6.1 billion in listed companies. They own 21% of Housing Finance, 10% of Equity Bank and 25% of Acorn group. They are acquiring Real Insurance for Kshs 1.3 billion (825m cash and shares for the balance).

The bond issuance

will cost Kshs 57m shillings – and Dyer & Blair get about Kshs 36M of this as the arranger gets (27M) and for the Placement (9M).

Swala Energy: Swala Oil & Gas(Tanzania) aim to raise between TZS 1.6 billion ($969,000) if they sells 3.2 billion shares and TZS4.8b ($4.8 million) if they sell 9.6 billion shares at TZS 500 each. The Offer is conditional on the Company achieving a minimum subscription of 3,200,000 Shares under this Prospectus, to raise TZS 1,600,000,000 (before expenses of the Offer). The Company may decide not to allot any shares and repay all application monies or seek a no objection to proceed with the allotment, in case the minimum subscription is not attained.

The minimum subscription is TZS 50,000 ($30) for 100 Shares. You can apply online, but a physical application form must be received at the brokers by 4th July.

Swala

has total assets of $1.8 million in 2013 (up from $75,000 in 2012) . revenue in 2013 was $285,000 (up from $62k) and loss was $5.5 million for the year (down from $1.26m the year before).

They are fundraising as they plan to spend $3.5M next year and $6M the year after.

A London broker values the company at $52.3 million based on 50% interest in Pangani (an area of 8578 sq. km worth $25.1m) and 50% in Kilosa Kilombero (an area of 8838 sq. km worth $36.3m).

In Tanzania, profits from oil are shared out as 45% government and 55% to the contractor when production is less than 12,500 barrels per day and when barrels are over 100,000 per day, the government gets 70% and the contractor 30%.

Swala has applied for approval to list on the Enterprise growth Market section of the Dar es Salaam stock exchange (they need 100 shareholders so list).

Swala will go from holding 74% to 61% and new shareholders all have 10% with convertible note holders with 7%.

Tanzanian Applicants will be allocated Offer Shares in priority to all other Applicants. Any Offer Shares remaining thereafter will be allocated to East African Applicants. Offer Shares will only be allocated to Foreign Applicants if they have not all been acquired by Tanzanian Applicants and East African Applicants.

Unexpected gains/losses: Kenol suspension was listed, Bonus share of Stanbic Uganda bonus was issued (4 new for every existing share)

Looking Forward to more listings like the one announced today from Umeme – a monopoly electricity distributor from Uganda that is 100% owned by Actis, and which plans to have an IPO in Uganda and Kenya later this year.

Comparing changes to three months ago and a year ago, investor confidence has dipped further, and the Kenya shilling is even weaker, having fallen past the Kshs. 100/$ to the dollar before last week’s drastic rate hike by the Central Bank brought the rate back to to 95, but which also pushed most commercial banks loan rates to 25%

Review: The Portfolio is down 2% in the last three months as is the NSE 20 Share Index, which is also down 2%.– Best performer: Bralirwa 24% (only share that has appreciated in this Qquarter)– Worst performer: Britak -38%, Kenya Airways -25% – In: Britak– Out: None– Increase: KCB, KQ– Decrease: None

OtherSplits: NoneBonus: NoneDividends: Interim from Kenol, and Barclays, and it was pleasant to be able to encash a Bralirwa Rwanda dividend cheque over the counter at KCB in Nairobi – unlike with Stanbic (UG) Uganda, that takes about a month clearing and the bank charges can take a huge chunk out.

Events:– Safaricom shocked with a 47% drop in half year profits to September 2011.– Kenya Airways got shareholder approval for a rights issue to finance fleet expansion in the next few months (Said to be at Kshs 21/= which is about where the share is now.– Tanzania has the Precision Air IPO and Tanzania Breweries sale but the mixed signals – welcoming/shutting out East Africans, and not getting proper approval from Kenya’s capital markets means there’s likely to be little cross-border participation once results are announced.

Data: The NSE now has a shares app for Android mobile phones and signed a partnership creating two new FTSE NSE indices.

The post is based on random thoughts on education in Kenya spurred by events like the Loreto Msongari bus accident, to talks with school administrators, observing universities take over libraries and nursery schools to expand their class sizes, reading blogs, and getting lots of press releases some of which touch on the education sector in Kenya .

Who will build schools?: With the cost of real estate going up in Nairobi (Kshs 100 million [$1.1 million] for an acre in some parts) it is getting harder to imagine how more schools can be built to cater for the young growing population.Former Nairobi nursery school, now a university campus

Schools like Makini (profiled in this story in the Business Daily ) have grown from having 8 students to over 1,000 after many years of hard work and success, that they now have eleven (11) streams of primary school pupils. Also, due to demand for places, some nursery schools have long waiting lists, and advise parents to register/book places for prospective students , before the children are even born.

Value in education is found in other places, like the recent Hillcrest settlement, which concluded a decade-long running bank receivership by way of new investments by a venture capital fund and a private school chain (Rose of Sharon) who will continue to run and expand the school.

What about old schools?: This post by Rookie Manager further points out the waste of resources that parents throw by enrolling their children in newer private and expensive private schools and wonder if by channeling the same funds towards rehabilitating old existing public schools would go a lot further. These old schools have the advantage of being located in established neighbourhoods and have ample space for various educational pursuits

What about new parts of the city? Nairobi is growing driven by private sector housing developments, notably in the Kitengela and Southern parts of the City, but this s not being matched in terms of education.

One touted solution comes from the Bridge International Academies who offer a low-cost school model designed to quickly roll out in low-income areas and offer quality education at a cost of about $4 per month for each child. However a blog post was written that offered s contrarian assessment about the system and this elicited a comment in response and explanation of the program from the co-founder.

The anticipated demand for schools has also become point of controversy in China with a investment fund that plans to build 1,000 schools in Africa.

In terms of Curriculum & research, G33kdiary has a post on the current hunger situation in Kenya and she notes that Kenya’s food security is unlikely to improve as long as schools don’t teach agriculture and emphasize & promote farming livelihoods, while White African had another on the lack of Africa ICT research

Recent Financial incentives: recent ones of note include:

South Sudan is offering to pay loans for her nationals in the USA provided they have completed their education (bachelor’s degree, master’s degree or PhD.) and are willing to return home to work (The pilot program is called the South Sudan Student Loan Forgiveness Program – SSSLFP).

Eagle Africa (former AIG Insurance) recently launched a low cost insurance plan to protect kids from road accidents playground incidents – it covers the entire time an insured student is in the hands of the institution including travel to and from the school.

Having adequate savings to fund education is one constant constraint, and financial funds like British American (who just had a 60% subscription in their IPO) is one of them; Britak offer education savings plans – called Super E plus, Elimu Bora, and Invest Plus, which all offer a variety of savings, insurance, and investments.

Use of technology: Encyclopedia’s for schools was the theme of a recent talk by a visiting Wikimedia team at the iHub. They covered the need to spread knowledge to the offline population – such as to remote schools with few textbooks (but perhaps a computer), and offered a solution in the form of a single DVD from Wikimedia can hold over 1 million articles, as well as a free software tool called Kiwix which enables the articles to be read offline to teach students in remote distant partsWikimedia in education
– iPads and Kindles : E-readers will change the way the developing world reads is an argument put forward in this post based on observations from Ghana, to Kilgoris. However, a follow-up report notes that Kindle rule changes from Amazon mean that content cannot be loaded across multiple devices at one time and each kindle has to be tethered to its own account – both of which limit its potential as a mass education tool.

The absurd: The above post title comes from an infamous Bush-ism or slip of the tongue by former American president George W. Bush.

And finally, in the news today, is a Kenyan Member of Parliament who is about to lose his seat – because one of the allegations leveled was that the MP could not articulate himself in English and Kiswahili and may have falsified his language proficiency exam results.